Why aren’t you transparency reporting?

This guest blog by Trade Me's Jon Duffy talks about why NZ organisations are not doing transparency reports - and why it's so important that we turn this around.

Transparency is good. We know because Trade Me just released its fourth transparency report. Four years on, it is surprising that apparently we're the only company in New Zealand regularly doing this, especially in the current privacy environment.

We were encouraged to take the plunge and begin transparency reporting after seeing the example set by some of the gargantuan global tech companies. We've taken what they do as a base and expanded on it. Our report aims to include the information we think will be most useful to our community and in line with being trusted and straight up. The level of detail we include won't be appropriate to every company who should be reporting. But, regardless of what the final form looks like, any effort at transparency is better than nothing. It's disappointing that more New Zealand companies aren't doing it.

The recent trial by the Office of the Privacy Commissioner showed that a range of companies were sufficiently interested in the idea of transparency reporting to participate on a confidential basis. So why are we yet to see a barrage of transparency reports published this year from the banks, the telcos, from utility companies, airline companies and loyalty schemes?

We haven't done a poll, but speaking from experience we can make a few guesses as to why. Here are our top three:

Undeveloped privacy culture

For private companies with significant databases, releasing information to government agencies is a simple reality of trading. There is devil in the detail, but in order to be transparent, companies must embrace this reality, and publicly. For some, this will involve a cultural shift.

Organisations that look for ways to sweep their levels of disclosure under the carpet need to ask themselves why they are hiding this information from their customers. Just because being a closed shop is the way it has always been done doesn't mean it has to stay that way. We think the tide of consumer expectation is turning and companies may soon have no choice but evolve and increase transparency to avoid embarrassment down the track.

We have found transparency reporting a useful annual check-in on the reality of our own privacy culture. We make improvements where the process shows we could do better. As well as a check on performance, the openness of transparency reporting is now influencing our company culture and brand.

A lack of resource committed to privacy

In order for privacy culture to thrive, businesses need to devote appropriate resource to doing things right. Handling requests for information from government agencies, whether they are under the Privacy Act or some form of compulsion order, takes expertise. It is not simply a processing exercise.

It is an unfortunate reality that government agencies cannot always be relied upon to produce legal, proportionate and appropriate requests for information. The Privacy Act places the onus on the agency releasing information to be satisfied that a release is justified in the circumstances. There is no obligation to release, just because a government agency has requested the information. Staff need the expertise and confidence to push back on agencies and refuse to release if the appropriate standards aren't met.

Needless to say, hiring the expertise to do this well comes at a price. Businesses need to commit to spending the money it takes to get it right. Similarly, if you don't have the data on what you are releasing to government agencies structured in the right way (or at all), you won't be able to extract it accurately in a report. Again, companies need to commit to building the tools to do this well. This is not cheap.

Transparency reporting provides a way to highlight government agencies who are making inaccurate or disproportionate requests. We think this helps them improve which is a good result for everyone.

A fear of brand damage

When you first take the plunge, transparency reporting is scary. How on earth are your customers going to react to the fact that you are asked to disclose their financial data to the IRD on a regular basis? Will they shun you? Or will they increase their trust in you because they see you being upfront about what is happening to their data?

The majority of the feedback we have received over the past four years has been positive. Sure, some people are surprised at the level of requests from some agencies and want to talk about it – but that is a good conversation to have.

The brand implications of increased expectations around transparency is something for each company to wrestle with, albeit with limited certainty. At Trade Me, we believe it is the right thing to do. Boards and executive teams should be actively discussing transparency, and we see a time when customers will simply expect it from companies holding their data.

As a final thought, there is value in pointing out that this discussion has focussed on private sector reporting, but what about the reverse? Why are government agencies not reporting on how many requests they make? Surely this is a shared responsibility.